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200001597 COVENANTS. Borrowers and Lenders covenant and agree as follows: 1. Payment of Principal and Interest; Prepayment and Late Charges. Borrowers shall promptly pay when due the principal of and interest on the debt evidenced by the Note and any prepayment and late charges due under the Note. 2. Charges; Liens. Borrowers shall pay all real estate taxes and assessments attributable to the Property which may attain priority over this Security Instrument, and leasehold payments or ground rents, if any. Borrowers shall promptly discharge any lien which has priority over this Security Instrument unless Borrowers: (a) agree in writing to the payment of the obligation secured by the lien in a manner acceptable to Lenders; (b) contest in good faith the lien by, or defend against enforcement of the lien in, legal proceedings which in the Lenders' opinion operate to prevent the enforcement of the lien or forfeiture of any part of the Property; or (c) secure from the holder of the lien an agreement satisfactory to Lenders subordinating the lien to this Security Instrument. If Lenders determine that any part of the Property is subject to a lien which may attain priority over this Security Instrument, Lenders may give Borrowers a notice identifying the lien. Borrowers shall satisfy the lien or take one or more of the actions set forth above within 10 days of the giving of notice. 3. Hazard Insurance. If required by Lenders, Borrowers shall keep any improvements now existing or hereafter erected on the Property insured against loss by fire, hazards included within the term "extended coverage" and any other hazards for which Lenders require insurance. This insurance shall be maintained in the amounts and for the periods that Lenders require. The insurance carrier providing the insurance shall be chosen by Borrowers subject to Lenders' approval which shall not be unreasonably withheld. All insurance policies and renewals shall be acceptable to Lenders and shall include a standard mortgage clause. If Lenders require, Borrowers shall promptly give to Lenders all receipts of paid premiums and renewal notices. In the event of loss, Borrowers shall give prompt notice to the insurance carrier and Lenders. Lenders may make proof of loss if not made promptly by Borrowers. 4. Protection of Lenders' Rights in the Property; Mortgage Insurance. If Borrowers fail to perform the covenants and agreements contained in this Security Instrument, or there is a legal proceeding that may significantly affect Lenders' rights in the Property (such as a proceeding in bankruptcy, probate, for condemnation or to enforce laws or regulations), then Lenders may do and pay for whatever is necessary to protect the value of the Property and Lenders' rights in the Property. Lenders' actions may include paying any sums secured by a lien which has priority over this Security Instrument, appearing in court, paying reasonable attorneys' fees and entering on the Property to make repairs. Although Lenders may take action under this paragraph 4, Lenders do not have to do so. Any amounts disbursed by Lenders under this paragraph 4 shall become additional debt of Borrowers secured by this Security Instrument. Unless Borrowers and Lenders agree to other terms of payment, these amounts shall bear interest from the date of disbursement at the Note rate and shall be payable, with interest, upon notice from Lenders to Borrowers requesting payment. 5. Inspection. Lenders or their agents may make reasonable entries upon and inspections of the Property. Lenders shall give Borrowers notice at the time of or prior to an inspection specifying reasonable cause for the inspection. 6. Condemnation. The proceeds of any award or claim for damages, direct or consequential, in connection with any condemnation or other taking of any part of the Property, or for conveyance in lieu of condemnation, are hereby assigned and shall be paid to Lenders. In the event of a total taking of the Property, the proceeds shall be applied to the sums secured by this Security Instrument, whether or not then due, with any excess paid to Borrowers. In the event of a partial taking of the Property, unless Borrowers and Lenders otherwise agree in writing, the sums secured by this Security Instrument shall be reduced by the amount of the proceeds multiplied by the following fraction: (a) the total amount of the sums secured immediately before the taking, divided by (b) the fair market value of the Property immediately before the taking. Any balance shall be paid to Borrowers. If the Property is abandoned by Borrowers, or if, after notice by Lenders to Borrowers that the condemnor offers to make an award or settle a claim for damages, Borrowers fail to respond to Lenders within 30 days after the date the notice is given, Lenders are authorized to collect and apply the proceeds, at their option, either to restore or repair the Property or to pay the sums secured by this Security Instrument, whether or not then due. 7. Borrower Not Released; Forbearance by Lenders Not a Waiver. Extension of the time for payment or modification of amortization of the sums secured by this Security Instrument granted by Lenders to any successor in interest of Borrowers shall not operate to release the liability of the original Borrowers or Borrowers' successors in interest. Lenders shall not be required to commence proceedings against any successor in interest or refuse to extend time for payment or otherwise modify amortization of the sums secured by this Security Instrument by reason of any demand made by the original Borrowers or Borrowers' successors in interest. Any forbearance by Lenders in exercising any right or remedy shall not be a waiver of or preclude the exercise of any right or remedy. 8. Successors and Assigns Bound; Joint and Several Liability; Co- signers. The covenants and agreements of this Security Instrument shall bind and benefit the successors and assigns of Lenders and Borrowers, subject to the provisions of paragraph 13. Borrowers' covenants and agreements shall be joint and several. 9. Legislation Affecting Lenders' Rights. If enactment or expiration of applicable laws has the effect of rendering any provision of the Note or this Security Instrument unenforceable according to its terms, Lenders, at their option, may require immediate payment in full of all sums secured by this Security Instrument and may invoke any remedies permitted by paragraph 15. If Lenders exercise this option, Lenders shall take the steps specified in the second paragraph of paragraph 13.